Outsourcing logistics: a look at the trends and what they could mean for e-commerce

Why more businesses are outsourcing their logistics

For companies that sell products online, the efficient management of logistics services and warehouse flows is a fundamental competitive marker that has a direct impact on business costs and an indirect impact on customer satisfaction.

Offering quality items at a good price is no longer enough in a market where competition is increasingly diversified and strong. A personalised shopping experience with plenty of options on delivery times and methods is now key when it comes to attracting new online customers and retaining existing ones.

But not all e-commerce operations, especially in the start-up phase, have established structures and enough staff to cope with the demands of such a dynamic market. This is why using third-party logistics is often the best way to satisfy an ever more demanding clientele.

What is outsourced (or third party) logistics? Put simply, it means outsourcing the managing of your warehousing, transport and delivery services to an external partner who specialises in this field.

There’s a growing trend in both large and smaller e-commerce companies choosing this route - +11% in 2022, according to the latest European E-Commerce Report. It’s also a major factor influencing the decision of traditional companies to switch to a digital model, whether managed internally or fully outsourced, so that they can optimise the production chain and cope with peaks and troughs in demand.

· Outsourced logistics will go from a turnover of 67.2 billion euros in 2019 to over 78 billion euros by 2025.

· 65% of people who buy products online only complete the transaction after checking the shipping offer.

The advantages of third-party logistics

According to data recently published by Statista, outsourced logistics is the ideal solution for SMEs, e-commerce companies and start-ups, and will continue to grow in the coming years, going from a turnover of 67.2 billion euros in 2019 to over 78 billion euros by 2025. This highlights the need for companies to find trusted players capable of offering specialist services. But what are the advantages?

Cost reduction: If the entire supply chain is to be managed in-house, from the storage of goods to the delivery of the product, huge investments are required in terms of infrastructure and buildings, software for warehouse and shipping management (WMS), as well as staffing and training. Since this is a significant commitment that is not sustainable by all companies, especially during the start-up phase, third-party logistics services can provide an excellent solution. Entrusting warehouse management, shipments and delivery to partners with the necessary infrastructure, resources and reach allows you to access scalable support to ensure customer needs are met.

Optimal warehouse management: One of the most delicate aspects of owning an online shop is the management of stock, returns and the increased space needed for the storage of goods during periods of peak demand. Using a third-party warehouse allows you to respond promptly to market needs, streamline storage and shipping processes and thus optimise space and scheduling.

Service improvement: According to research conducted in the US by the National Retail Federation, 65% of people who buy products online only complete the transaction after checking the shipping services offered. This shows how strongly shipping influences buying decisions: shipping times, returns policies and customised packaging are just some of the aspects that can influence the purchasing process.

Using the right tools and technology also impacts company productivity. That’s why software that can update you on stock and order processing status in real time is crucial. Using a specialist partner allows you immediate access to the latest IT solutions that integrate logistics and warehouse management processes to offer customers accurate, real-time information on their orders.

Outsourced logistics trends

While third-party logistics offers efficiency and the optimisation of resources, it also allows small businesses to stay up to date with the latest logistics strategies, opening the door to new ways of managing their deliveries and exploiting industry trends, including:

Growth of automated processes: One of the key trends in third-party logistics, automated procedures keep the manufacturing process under control. Artificial Intelligence and software that can integrate inventories in the warehouse with shipment tracking information can significantly increase the efficiency of the production process.

Sustainability: Consumers’ growing awareness and interest in environmental issues and sustainability means the use of ecological packaging materials is becoming a strong factor in the choice of logistics service providers. This trend cannot be ignored, and it’s encouraging more companies to optimise their processes.

Focus on customer experience: Users are becoming more and more demanding when it comes to quality of service, driving companies to devote ever greater attention to customer experience. The tracking of shipments in real time, customised delivery options, rapid and punctual assistance, and a choice of delivery and collection times are now essential differentiators in a highly competitive market.

For smaller companies, e-commerce businesses and start-ups, it’s not easy to find solutions that can provide efficient and timely responses to customer demands, while keeping up with the trends in an ever-evolving market. Mail Boxes Etc. is the ideal partner for customised logistics solutions that meet your business needs, with flexible, automated processes – from simple shipping to professional packing and from warehouse storage to document printing. Contact your local MBE centre to find out more about how our professional solutions can be tailored to your precise needs.

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